Fashion
India may be cautious about opening up sensitive sectors: Care Ratings
Though the United States and China have extended their trade truce by another 90 days to continue negotiations, issues such as trans-shipment-linked tariffs remain a key factor worth monitoring for China’s trade outlook, it noted in its latest Global Economy Update.
Despite tariff headwinds, China’s overall export performance has remained resilient, supported by stronger shipment to other regions, while India’s low share of goods exports to the US should provide some buffer, Care Ratings said.
Though there is growing pressure on India to negotiate a trade deal with the US, the agency feels the country is likely to remain cautious about opening up sensitive sectors.
Though there is growing pressure on India to negotiate a trade deal with the United States, Care Ratings feels the country is likely to remain cautious about opening up sensitive sectors like agriculture and dairy, and therefore, the negotiations may take some time to conclude.
Furthermore, key US suppliers of footwear, textiles and leather like Vietnam and Indonesia could gain from lower US tariffs compared to India.
Strong front-loading in international trade, lower worldwide effective tariff rates vis-a-vis April expectations and improvement in global financial conditions supported the upward revisions to the 2025 growth forecasts across economies, according to the document.
This front-loading is expected to unwind in the coming quarters keeping the 2025 growth below the pre-pandemic historical average of 3.7 per cent, Care Ratings noted.
Front-loading of some trade flows in anticipation of tighter trade restrictions provided near-term offset. This is expected to fade in the second half of 2025. However, 2026 trade growth forecast has been trimmed lower amid volatile global trade conditions, it said.
Global foreign direct investment (FDI) net inflows as a percentage of global gross domestic product (GDP) have broadly declined since the Global Financial Crisis, with subsequent shocks adding further pressure.
While FDI flows as a percentage of GDP declined for major economies, the ‘connector’ economies have gained from the investment reorientation strategies of the United States and China.
‘Connector’ economies have a favorable mix of FDI policies and structural characteristics. Furthermore, they are geopolitically non-aligned and can serve as conduits in trade and investment flows between geopolitical blocs.
Debt levels in many economies is going up faster than the economic growth, raising long-term debt sustainability concerns, Care Ratings added.
Fibre2Fashion News Desk (DS)
Wholesale revenue dropped 12.8 per cent on a currency-adjusted basis to €4.9 billion, while direct-to-consumer (DTC) sales increased 3.4 per cent, lifting the DTC share to 32.4 per cent from 28.9 per cent.
Regionally, sales fell 6.9 per cent in Europe, Middle East and Africa (EMEA), 7.4 per cent in Asia-Pacific and 10 per cent in the Americas, with North America driving much of the decline.
Puma has reported sales of €7.3 billion (~$8.61 billion) in FY25, with currency-adjusted revenue down 8.1 per cent amid strategic reset actions.
Wholesale declined while DTC share increased.
Margins contracted and EBIT turned negative, leading to a net loss.
Q4 saw sharper declines across regions and categories.
Puma expects further sales softness and negative EBIT in FY26.
By product segment, footwear sales decreased 7.1 per cent, apparel declined 9.7 per cent and accessories fell 8.5 per cent, although selective growth was observed in running, training and premium sport style lines, Puma said in a press release.
Profitability weakened significantly during the year. Gross margin contracted 260 basis points to 45.0 per cent, impacted by promotional activity, inventory reserves, unfavourable mix and currency effects. Adjusted EBIT turned negative at €165.6 million, while reported EBIT declined to -€357.2 million after €191.6 million in one-off costs related mainly to the cost efficiency programme and goodwill impairments.
Loss from continuing operations widened to -€643.6 million, translating to earnings per share of -€4.37 versus €1.88 in the prior year.
From a balance sheet perspective, inventories rose 2.3 per cent to €2.06 billion as inventory takebacks from wholesale partners supported distribution clean-up. Working capital increased 20.2 per cent, while trade receivables and payables declined sharply in line with reduced sales and purchasing activity. Puma ended the year with additional financing capacity, including €1,202.2 million in unutilised credit lines.
Fourth quarter (Q4) performance reflected the peak impact of the strategic reset. Currency-adjusted sales declined 20.7 per cent to €1,564.9 million, with reported revenue down 27.2 per cent due to currency headwinds. The decline was driven by deliberate reductions in wholesale exposure, inventory clearance actions and lower promotional intensity.
Wholesale sales fell 27.7 per cent in Q4, while DTC revenue decreased 8.0 per cent, although DTC share increased to 41.1 per cent from 35.5 per cent. Regionally, sales dropped 12.6 per cent in Asia-Pacific, 22.2 per cent in the Americas and 24.3 per cent in EMEA.
Across product divisions, footwear sales declined 25.4 per cent, apparel fell 13.7 per cent and accessories dropped 18.2 per cent, with selective resilience in training and performance running categories.
Profitability deteriorated sharply. Gross margin declined to 40.2 per cent from 47.7 per cent due to promotions, inventory provisions and currency effects. Adjusted EBIT fell to -€228.8 million, while reported EBIT reached -€307.7 million following one-off costs linked to restructuring and impairment charges. The quarter ended with a loss from continuing operations of -€335 million.
Arthur Hoeld, CEO of Puma, said: “2025 was a reset year for us. We want to establish Puma as a top 3 sports brand globally, return to above-industry growth and generate healthy profits in the medium term. It is crucial to make the Puma brand less commercial and ensure we once again excite our consumers with attractive products, compelling storytelling and distribution in the right channels. I am satisfied with the progress we have made so far. We cleaned up most of our distribution by reducing promotions in our own channels and cutting our exposure to those wholesale channels that damage our brand’s desirability. To better position our product icons and our performance offering and tell more engaging product stories, we created the right structures inside our company. We also addressed operational inefficiencies and further optimised our cost base.”
Looking ahead, Puma expects currency-adjusted sales in fiscal 2026 to decline in the low- to mid-single-digit percentage range, with EBIT projected between -€50 million and -€150 million. Capital expenditure of around €200 million is planned as the company continues investments in brand repositioning and digital capabilities, added the release.
Fibre2Fashion News Desk (SG)
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